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COP above $1900 again

Oct. 22 (Bloomberg) -- Colombia’s peso fell to a three-week low on speculation the central bank may act tomorrow at a meeting to ease the currency’s rally, including possibly taking such steps as buying dollars directly in the spot market.

The peso slid 0.8 percent to 1,910.30 per U.S. dollar at 11:43 a.m. New York time, from 1,895.65 yesterday. It touched 1,937.60 yesterday, its lowest level since Oct. 2. The currency has slumped 3.3 percent in the past five trading days, hurt by Brazil’s imposition of a tax on stocks and bonds to ease the real’s rally.

“Brazil’s capital controls have generated a lot of noise in the currency market, especially since Colombia had already used those instruments in the past,” said Francisco Chaves, an analyst at Bogota-based brokerage Corredores Asociados. “Investors prefer increasing their dollar holdings on bets the central bank will take measures to ease the peso’s gains, which will most likely be the purchase of dollars directly in the spot market.”

Finance Minister Oscar Ivan Zuluaga, who is also president of the central bank’s board, said last week policy makers may take measures to stem the peso’s gains when they next meet on Oct. 23. The peso tumbled 2.5 percent on Oct. 20 after Brazil imposed a tax on foreign purchases of equities and bonds.

He said it was “unlikely” policy makers will cut the overnight lending rate further. Last month Banco de la Republica lowered the key rate a half-percentage point to 4 percent to revive growth and stem gains in the peso.

Dollar Inflows

Zuluaga also said last week that the government will refrain from selling dollars in the market for the rest of the year after expectations of higher inflows of government dollars helped push the peso to its strongest level since August 2008.

President Alvaro Uribe has urged the central bank to find a “solution” to the peso’s gains, which he said has caused exporters to cut jobs.

In a bid to stem a rally in the peso in 2007, policy makers ordered companies and investors taking loans abroad to deposit 40 percent of the funds in the central bank for six months to reduce the incentive to bring in short-term capital. The Finance Ministry that year imposed deposit requirements on new portfolio investment in the country, such as the purchase of bonds and stocks. The controls were abolished last year.

The yield on Colombia’s 11 percent bonds due in July 2020 fell one basis point, or 0.01 percentage point, to 8.62 percent, according to Colombia’s stock exchange.

By BillBigD on Oct 22, 2009, 10:12 in Friendly Talkzone.

Paisa/Calena/Luver says on Oct 22, 2009, 10:41:

I dont believe this will be sustaining for a minute. Look for a another drop the way Obama is still on a printing dollar binge. The inflation will be killing us. Too many unaccounted for Dollars out there.

"PAY ATTENTION! I wonder if that person knows that when we push the FUNNY button, its because we are reading something outrageous, trying to be cynical, derogatory, sarcastic and/or obnoxious!"

1 funny, 1 helpful.

tropicalshirt says on Oct 22, 2009, 11:16:

Inflation???

What inflation? Interest rates are at record lows, inflation, its all in your head...(and the printing money, falling currency and spiralling import prices JAJAJAJAJA!!!)

FOK! My fresh mango chunks just gone up!

1 funny, 1 helpful.

Paisa/Calena/Luver says on Oct 22, 2009, 11:26:

What are you boracho! Look here!

http://www.govtrack.us/congress/record.xpd?id=111-h20090923-22

"PAY ATTENTION! I wonder if that person knows that when we push the FUNNY button, its because we are reading something outrageous, trying to be cynical, derogatory, sarcastic and/or obnoxious!"

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tropicalshirt says on Oct 22, 2009, 11:56:

No inflation in Medallo until we hit the bars!

El centro OK PCL?

0 funny, 1 helpful.

bam m says on Oct 22, 2009, 20:36:

dirt poor country with little to no value in the world market....unless you want a super cheap place to retire some day...who really cares if its 2500 or 1900.....the exchange has not slowed us at all in remodeling homes and a building, except driving down cost of labor....and firing every single worker that looks the wrong way at the contrators...

there are more shops closing in colombia daily....and if you are heavy you own the country.... for what that's worth...hahahaaha

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aa3mono says on Oct 23, 2009, 06:06:

2200 by year end...then in 2010 >2500 - 3000 and above. IMHO

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makopp5 (☼Travelguide writer) says on Oct 23, 2009, 06:18:

aa3
that`s your whish for santa claus?

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BUSHWICK-BILL says on Oct 23, 2009, 07:01:

My wish... USD vs. Colombian pesos 19000 pesos for 1 USD

CARDIFF SOUL CREW.......

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scumbuster says on Oct 23, 2009, 08:49:

It’s only a momentary rebound. The US $ will continue to fall. If it would by chance hit 2000 next week I will be transferring $ to COP

Tomas Jefferson “When the people fear their government, there is tyranny; when the government fears the people, there is liberty.”

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mickymoose says on Oct 23, 2009, 16:04:

Definition: Inflation: An increase in the the quantity of money and credit.
Inflationary effect: A rise in consumer prices due to an increase in monetary supply.
People often confuse these.

The US goverment has greatly increased the monetary supply. The US goverment has lowered the interest rate of banks borrowing this money to an unheard of .25%. This is new. The intention is to increase borrowing and devalue the dollar. The hope is that more people will borrow money and that the distressed dollar will ease the cost of this borrowing.

Thankfully, this hoped for effect has not yet happened. This will destroy the dollar, the world monetary system, and the US Republic (yes, Republic, or what's left of it, not a Democracy). While the money supply has increased, and the banks are flush with cash, the consumer and the corporations have yet to go on another borrowing binge. The effect of this inflation has yet to lead to a rise in consumer prices. When this money leaves the banks and hits the streets, we will all wish we had gold bars buried in our back yards instead of checking and savings accounts.

Gold = Specie: This is not an "investment", this is savings. This is the one currency that will still exist when every nation has perished from the earth.

The US and British goverments have bizarrely concluded that the current economic problems will be solved by people and corporations borrowing and spending like they did from 1990 -2007.

The problem is way too many people borrowing way too much money from way to many banks that borrowed way to much money from the federal reserve which borrowed way to much money from the Chinese, Japanese, Singapore, Saudi govts, etc, which lent way too much money so that US consumers can buy imported goods and McMansions, jet skis, plasma tvs, etc subsidized by the US taxpayer in the form of Fannie May, Freddy Mac, tax deductions for mortgages, FHA, the federal interstate system, and a currency that has controlled the earth since Bretton Woods.

This is the dying gasp of Western Civilization. Once this money hits the streets we will never recover. My grandchildren will return to serfdom.

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